LEGAL REFORM PROPOSALS MAKE PROGRESS

LONDON-Proposals to radically overhaul the civil justice system of England and Wales could make civil litigation faster, cheaper and more accessible, changing the way businesses, their insurers, and virtually every other player operates in the legal system.

A committee led by Lord Justice Woolf, Britain's most senior civil judge, produced its final report on the civil justice system last July. The report, with more than 300 recommendations, aims to cut the cost of litigation and speed up trials by transferring the management of litigation from the litigants to the courts.

Enabling legislation to implement some of the major reforms that actually would alter the system for getting certain cases through the courts, called the Civil Procedure bill, is currently going through Parliament. Once the enabling legislation is passed, then details of the recommendations that are going to be adopted can be worked out and the reforms can be implemented over a few year's time.

Among the proposals in the report is one that would steer legal action by the amount of money at stake.

Under the proposal, all cases claiming damages of less than (British pounds) 3,000 ($4,890)-or up to (British pounds) 1,000 ($1,630) in personal injury cases-would be referred to arbitration; all cases seeking between (British pounds) 3,000 and (British pounds) 10,000 ($16,300) would be allocated to a fast track for trial, though there are no specific details on what sort of timetable would constitute a fast track; and cases seeking more than (British pounds) 10,000 would be assigned to a judge to control the procedure, with detailed litigation plans filed by each side.

In all cases, a timetable for the legal process would be set by the court, with sanctions imposed on those parties that do not keep to the timetable.

Another proposal is designed to encourage parties to settle disputes earlier. Under that plan, defendants who refuse efforts to settle a lawsuit early but later lose at trial would have to pay a penalty of up to 25% of the damages awarded.

According to a 1996 survey by the Assn. of Insurance & Risk Managers, risk managers favor reforms that would lead to a speedier and more efficient court process.

They also welcome the initiatives by Lord Woolf to settle more cases and to increase the role of mediation and alternative dispute resolution, said Donna Thomas, an AIRMIC consultant who helped conduct the survey at last year's annual conference. "The majority of respondents believe that the benefits of (Lord Woolf's) reforms will outweigh any disadvantages," she said.

The proposed legal reforms would have several implications for insurers, according to London law firm Lawrence Graham.

For example, insurers would have to make earlier decisions as to their policyholder's potential liability and the insurer's responsibility for coverage of any award against the policyholder; investigate claims more quickly and assess relevant witnesses; invest in extra training and manpower to manage the new civil litigation procedures; and review the adequacy of reinsurance programs for covering the risk of claims being finalized sooner, according to the law firm.

"There's an expectation that the Woolf reforms will mean litigation will have a more structured and procedural approach," said a spokesman for Guardian Insurance Ltd., a subsidiary of Guardian Royal Exchange P.L.C.

Under the proposed reforms, defendants would need to supply documents requested by plaintiffs more promptly, as well as expert reports and witness statements. If the proposals are adopted, companies and their insurers will have to work together more effectively to be prepared for court, the spokesman predicted.